Opinion
No. 29670.
January 4, 1932.
1. BROKERS.
Allowance of 5 per cent, broker's commission on full rental value of 10-year lease of store building held excessive and unreasonable.
2. BROKERS.
Five per cent, commission on present value of ten-year lease held maximum that could reasonably be allowed to broker.
APPEAL from chancery court of Coahoma county. HON. R.E. JACKSON, Chancellor.
Brewer Brewer, of Clarksdale, for appellant.
It must be borne in mind that it is the general rule of law that the calling of a broker is not prior in the eye of the law to that of other occupations, and he is no more entitled to remuneration for services voluntarily rendered without employment, express or implied, than any other member of the community.
4 R.C.L., par. 43.
It takes two to make a contract of the kind herein sued upon and the owner is under no obligation to respond to every letter he may receive from a real estate broker whom he has not employed.
4 R.C.L. 299; Morton v. Barney, 140 Ill. App. 333.
In an action to recover commissions under an express contract a plaintiff cannot recover compensation for a different transaction.
4 R.C.L. 336; Chaffee v. Widman, 139 A.S.R. 220.
The mere seeking of an introduction to another by a broker is not legally the equivalent to employing him to sell the property and where there is nothing more in his favor, that incident will be regarded as voluntary and insufficient to entitle him to a commission.
4 R.C.L., par. 43, p. 299.
And it matters not that after the broker's failure and the termination of his agency, what he has done proves of use and benefit to his principal. In a multitude of cases that must necessarily result. It was part of his risk that failing himself, not successful in fulfilling his obligation, others might be left to some extent to avail themselves of the fruit of his labors.
4 R.C.L. 298, par. 42.
The amount allowed was based on the total rental for the entire period of the lease, part of which may not be collected and was out of all proportion for the service.
Roberson Cook, of Clarksdale, for appellee.
Where the same property is placed for sale with two or more brokers, the owner, provided he remains neutral towards the several brokers, is liable for commissions only to the one who first completes a sale, or, if the owner has not delegated authority to conclude the transaction, to the one who first produces a customer able, ready, and willing to purchase the property on terms agreeable to the owner; and this is true without any express contract to that effect. Where two or more agents employed by the owner show or make an effort to sell the same property to the same person, and such person afterward buys the property, and the owner is liable for the payment of the commission, the rule of law is that that agent is entitled to the commission who is the proximate efficient and procuring cause of the sale.
4 R.C.L. 335.
In the absence of a special agreement as to the amount of the broker's commissions, evidence of a custom at the time and place of employment becomes admissible for the purpose of determining it, but not otherwise. If no agreement fixing commissions exists and no usage can be shown, the broker is entitled to reasonable compensation. In determining what is reasonable under the circumstances of a given case, the end accomplished as well as the time and effort expended by the broker should be taken into consideration.
4 R.C.L. 332.
The mere fact that the complainant was not present when the transaction was finally consummated by the defendant and Morgan Lindsey does not in any wise defeat the complainant from a recovery in this cause.
4 R.C.L. 310.
While a seller of land can revoke the power of a broker before he performs his agreement, the seller cannot repudiate such agency to defeat the broker's commission after a purchaser is obtained who is able and willing to carry out the contract.
Cook v. Smith, 119 Miss. 375, 80 So. 777.
Where the terms of a sale are not specified under contract given a broker, and the sale is made by the principal, still the broker has performed his contract and is entitled to his commission when he produces a purchaser to whom principal sells.
Roell v. Offutt, 138 Miss. 599, 103 So. 239.
In order to entitle a broker to his commission, he is only required to show that he procured a purchaser who was ready, willing and financially able to purchase and pay for the property within the time and upon the terms fixed.
Hays v. Goodman Leonard Realty Co., 111 So. 869.
Argued orally by Ed. Brewer, for appellant.
Ritchie was complainant, and filed a bill in the chancery court against King Anderson, Inc., a nonresident corporation owning property in Clarksdale, Mississippi, alleging that under a contract with King Anderson, Inc., he was entitled to recover five per cent commission on the aggregate rents of a ten-year rental contract by which King Anderson, Inc., rented to Morgan Lindsey a certain building on Yazoo street in Clarksdale, Mississippi.
It appears that Ritchie saw a report in some paper that Morgan Lindsey were conducting retail stores at different points, and at some point in Louisiana had made a contract to operate a store there. Ritchie got in communication, through a friend, with Morgan Lindsey with the view of inducing them to locate a store in Clarksdale, Mississippi. The letters passing between them seem to have favorably impressed Morgan Lindsey with Clarksdale, and they expressed an interest in Clarksdale and a willingness to look into the proposition. Ritchie then took up with King Anderson, Inc., the proposition of building a store to lease for a period of twenty years to Morgan Lindsey, the store to be of such character as they desired. King Anderson, Inc., owned vacant property in Clarksdale, and they expressed a willingness to negotiate and to erect a building, but they were unwilling to execute a lease for a longer period of time than ten years. Considerable correspondence passed between Ritchie and Morgan Lindsey, and through Ritchie's efforts they finally submitted a blueprint showing the character of store they desired and the kind of front they desired it to be fitted with. After corresponding with Ritchie, they finally agreed to take a store such as King Anderson were contemplating erecting for a ten-year lease, and agreed to take it any time within ten months after the building was completed. It appears that King Anderson, Inc., were not willing to sign up a lease contract until the building was erected. According to the complainant, Ritchie, they agreed to erect the building, but did not want to begin at once. The negotiations were begun in June, and it was February following before the building was actually constructed.
However, after the correspondence and negotiations between Ritchie and Morgan Lindsey, a representative of Montgomery Ward Co. came to Clarksdale at the instance of Mr. Peevy, who was connected with one of the banks, and the bank desired to erect a building and thought probably Montgomery Ward Co. would be interested in a store building in connection with the bank. Mr. Ritchie was co-operating with Mr. Peevy in the matter, and it appears that the Montgomery Ward Co. representative did not desire to contract with the bank or Mr. Peevy, and that Mr. Ritchie took up with them the proposition of leasing a building from King Anderson, Inc., having in view King Anderson, Inc., erecting a building for said proposition. King Anderson, Inc., were not willing to erect a new building, but expressed a willingness to negotiate with reference to the building they were then constructing and which Ritchie had been negotiating for Morgan Lindsey. The contract was finally drawn up between the representative and King Anderson, Inc., for lease of said building for a term of years and a contract prepared which was sent to the office of Montgomery Ward Co. in Chicago, but the contract was not approved, and this deal fell through.
Thereafter a representative of J.C. Penney Company came to Clarksdale and got in touch with Ritchie and was looking for a location. Ritchie took up with King Anderson, Inc., a proposition to rent, or erect, a building for J.C. Penney Company, and a contract was drawn up between King Anderson, Inc., and the J.C. Penney Company and forwarded to the home office of that company for approval or rejection. That company rejected the contract.
It is admitted in the negotiations between Montgomery Ward Co. and King Anderson, Inc., that King Anderson, Inc., did not agree to pay a commission to Ritchie, and that Ritchie rendered whatever service he did in that regard voluntarily with the view of securing Montgomery Ward Co. a location at Clarksdale. In the negotiations between J.C. Penney Company and King Anderson, Inc., handled by Ritchie, it was agreed by King Anderson, Inc., that they would pay a commission of five hundred dollars to Ritchie for his service if the lease went through.
After the negotiations between Ritchie and Morgan Lindsey, and after they had apparently quit corresponding with reference to the matter, but after Morgan Lindsey had agreed, according to the proof, to take the building for a ten-year period on the terms named, another real estate firm in New Orleans took up with King Anderson, Inc., the proposition of leasing their store for a term of years, and a contract was finally consummated by which King Anderson, Inc., leased the property involved to Morgan Lindsey. By this lease contract Morgan Lindsey were to pay King Anderson, Inc., a rental in advance of three hundred seventy-five dollars per month for the first five-year period of the lease and a monthly rental of four hundred dollars for the second five-year period, with a further agreement that, if in any calendar year the gross sales of Morgan Lindsey Chain Stores exceeded the sum of one hundred thousand dollars, the lessee would pay as additional rental an amount equal to four per cent on all additional gross sales over one hundred thousand dollars.
After the store was completed, and after the contract had been made, Ritchie took up with King Anderson, Inc., the payment of his commission, which they refused to do, contending that he had no commission rightfully due him. Ritchie's testimony showed that in the negotiations entered into on the 24th day of June, King Anderson, Inc., agreed to pay him a commission, but the amount of the commission was not specified. The testimony for the defendants showed that the proposed contract with J.C. Penney Company was a more favorable one to King Anderson, Inc., than the present one, and that Ritchie agreed to handle that for a commission of five hundred dollars. It was Ritchie's contention that, although he did this, the parties were on the ground ready to close the deal, and that it did not require effort and negotiations of any length for him to close that deal, and that he had a right to cut his commissions. He testified that five per cent of the rental value of the property for the term of the lease was a reasonable fee or commission. It appears, however, that neither he nor any other real estate dealer had had experience in leasing business property of this kind under the conditions and circumstances existing in the present case.
One witness for the defendants, King Anderson, Inc., testified that five hundred dollars would be a reasonable fee, and another that two hundred fifty dollars, in his opinion, would be a reasonable fee.
The chancellor allowed five per cent on the total monthly rentals for the entire ten-year period, amounting to two thousand three hundred twenty-five dollars, with six per cent interest, the total amount aggregating two thousand four hundred eighty-nine dollars and twenty-two cents, from which judgment this appeal is prosecuted.
We think the chancellor was in error in rendering the five per cent commission on the full rental value of the lease, but that the five per cent commission should have been limited to the present value of the lease, and this is the maximum that could reasonably be allowed under the facts in this case. We think, under the evidence in this record, that five per cent on the total lease value, without finding its present value, but calculating it on the gross amount that would be realized at the end of ten years, is excessive and unreasonable. The judgment of the court below will therefore be reversed, and the cause remanded, with directions to find the present value of the rent contract as of the date of the filing of the suit.
Reversed and remanded.